Brazil investors hedge as 2026 Iran‑Israel conflict spikes global markets

In the first half of 2026, heightened geopolitical tension after the United States and Israel launched attacks on Iran and the Strait of Hormuz disrupted oil supplies, lifted Brent crude above $110 per barrel and drove the VIX above 35, a level last seen during the 2008 financial crisis and the 2020 pandemic.

Brazilian investors responded to the turmoil with a shift in capital flows. Foreign investors withdrew R$ 19.26 billion while domestic investors added R$ 24.01 billion through May, leaving a net foreign inflow of R$ 4.01 billion and a domestic net of R$ 6.12 billion. June data showed another R$ 4.37 billion foreign outflow offset by R$ 4.86 billion domestic buying. The Ibovespa rose 14.62 % in January but its momentum softened later in the year. Economist Raissa Florence noted, “The increase in domestic investor participation may be interpreted as a sign of gradual confidence in equities, but not yet a structural change.”

Globally, investors turned to technology assets, with Nvidia briefly reaching a $5 trillion market valuation and the five largest Big Tech firms committing $115 billion to capital expenditure. US derivatives markets saw record activity: the MIAX Sapphire Trading Floor in Miami hosted a Brazilian delegation that rang the opening bell, highlighting the surge in option and futures contracts used as hedges during periods of heightened risk.